NSW Premier Mike Baird insists a negative gearing overhaul should be considered and has foreshadowed a fresh debate on tax reform amid a looming black hole in health funding.
His planning minister Rob Stokes has broken ranks with federal Liberal colleagues to attack negative gearing and argue housing tax breaks should favour first homebuyers instead of wealthy investors.
"Yes, it should be considered. Have I got a position yet on it? No, I don't," Mr Baird told the National Press Club on Tuesday.
The NSW premier said he while he hadn't arrived at a position on negative gearing, the issue shouldn't be driven by partisan politics.
"If there is modelling or an approach that suggests there is an impact, a positive impact, on affordable housing, well of course that's something we should consider."
Prime Minister Malcolm Turnbull would not be drawn on Mr Baird's comments during question time on Tuesday, instead launching into an attack on the opposition leader.
Mr Baird in January drove a GST offensive, arguing the consumption tax should be raised to 15 per cent to plug health and education funding gaps.
The federal government later walked away from any changes to the GST.
Mr Baird doesn't expect any tax reforms in the next three years but says debate on the issue will inevitably resurface.
He said the states and Commonwealth were confronting a multibillion-dollar health funding blackhole between 2020 and 2030.
"Now, there either needs to be some form of economic miracle where our economic growth surges to the moon or massive efficiencies are found that no one can see," Mr Baird said.
"Or you are going to have to do something to either promote and stimulate the economy, or look at the revenue mix to deliver that service.
"What the tax is, and what the mix is, and how that is determined is obviously for a later day, but I think it is inevitable that we will get back to it."
Mr Baird said there were lessons to be learnt from this year's GST debate and time to recast the issue based on the "frightening" size and scale of the unfunded health spending.
"I'd strongly argue that if people are concerned about their healthcare ... I think many more people would be open to various tax reform options that help address that," he said.
"I think consensus will be built on the back of the fiscal reality of the health challenge that we're facing."
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